Strategy Technologies reported a net loss of $8.22 billion in the second quarter of 2026, primarily due to a downgrade in the fair value of its Bitcoin holdings. This represents a significant turnaround from the $10.02 billion net profit in the same period of the previous year.
The company currently holds 843,775 Bitcoins, with an average purchase cost of $75,476 per Bitcoin, for a total purchase cost of approximately $63.7 billion. Based on the quarter-end price of approximately $64,915, this holding is worth approximately $54.8 billion, representing a paper loss of nearly $9 billion.
First time selling coins in four years
The company disclosed that Strategy sold 3,588 bitcoins during the reporting period, realizing $218.4 million, which was used to pay preferred stock dividends. This is the company's first sale of bitcoins in four years.
The board also approved an arrangement allowing for the sale of up to $1.25 billion worth of Bitcoin in the future, with uses including paying preferred stock dividends, maintaining dollar reserves, and repaying debt. This signifies a substantial shift in Strategy's long-standing "buy-only" strategy.
New accounting regulations amplify profit fluctuations
The quarterly loss came almost entirely from $8.32 billion in unrealized impairment charges. Under the new accounting rules for the fair value of digital assets, companies are required to revalue their Bitcoin holdings at market value at the end of each quarter and include the changes directly in net income.
This rule has been in effect since 2025. The previous impairment model only allowed losses to be recognized when prices fell, but it did not allow for a corresponding reversal of book value when prices recovered. The new rule corrects this problem, but it also makes Strategy's profit and loss statement more susceptible to significant fluctuations in Bitcoin prices.
Software revenue remained largely unchanged.
Compared to fluctuations in its cash holdings, Strategy's core software business remained largely unchanged. The company's second-quarter software revenue was $122.39 million, largely in line with market expectations, representing a 6.9% year-over-year increase. Subscription revenue grew by 54%, with a gross margin of 66.6%.
However, from a financial perspective, the software business can no longer dominate the company's overall profit performance. Due to the large amount of Bitcoin holdings, quarterly profits depend more on the Bitcoin price at the end of the quarter than on the core business itself.
Preferred stock dividend pressure increases
The company's capital structure continues to evolve. Currently, outstanding preferred stock amounts to $14.4 billion, with annual dividend payouts approaching $1.2 billion. The company's cash reserves stand at $3.75 billion, which, at current levels, can roughly cover related payments for approximately 2.1 years.
Additional information:So far this year, Strategy has added 29,997 Bitcoins to its portfolio, increasing its holdings by 25% since the beginning of the year. After selling coins to pay dividends, market focus has shifted from continuing to increase holdings to whether there will be further sales in the future.
